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Acquisition of Habaneras Shopping Centre
VUKILE PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2002/027194/06)
JSE share code: VKE NSX share code: VKN
ISIN: ZAE000180865
Debt company code: VKEI
(Granted REIT status with the JSE)
("Vukile" or "the company")
ACQUISITION OF HABANERAS SHOPPING CENTRE
1. INTRODUCTION
In line with Vukile's previously communicated strategy of increasing its exposure in Spain, Vukile's subsidiary
Castellana Properties Socimi S.A. ("Castellana"), in which Vukile currently has a 98.7% shareholding, has
entered into an agreement with Heref Habaneras Socimi S.A.U (the "seller") to acquire the immovable property
known as the Habaneras Shopping Centre ("Habaneras") for an aggregate consideration of EUR80 626 864 (the
"Habaneras acquisition").
2. RATIONALE
In July 2017 Vukile announced the acquisition by Castellana of a portfolio of eleven retail parks for EUR193
million and the establishment of a strong in-country management team and operational platform. In December
2017 Castellana concluded two transactions to acquire two additional Spanish retail parks for a total of EUR70
million. The Habaneras acquisition allows Vukile, via Castellana, to leverage its operational platform and grow
its Spanish portfolio of retail parks and shopping centres. The territories in which Castellana operates continue
to experience strong demand for space with limited prime retail space availability. The acquisition is expected to
enhance Castellana's retail offering within its areas of operation.
Habaneras is a well-located, recently refurbished shopping centre with a total gross lettable area of 24 158m2
situated in Torrevieja, Alicante, Spain. Habaneras has a good tenant mix with a national tenant component of
92%, including the Inditex Group, C&A, AKÍ and Forum Sport. It has a strong fashion component of 45%. The
leading Carrefour in the region as well as a Lidl supermarket, cinemas and various fast food outlets are located
in the greater 60 000m2 retail node which Habaneras anchors. The centre has a weighted average lease termination
of 6.1 years to expiry and 3.8 years to next breaks.
It is expected that Castellana's active asset management will add value to Habaneras. Asset management
initiatives will include leasing vacant space, adding lettable area to Habaneras, repositioning and expanding
existing tenants' space and enhancing the centre's terraces by including more leisure options and experiences.
3. TERMS OF THE HABANERAS ACQUISITION
The effective date of the Habaneras acquisition is 9 May 2018.
The purchase consideration payable for Habaneras is EUR80 626 864, payable in cash on the effective date.
Whilst the seller has provided normal warranties, indemnities and undertakings for a transaction of this nature,
the purchaser will need to rely on warranty and indemnity insurance underwritten by Ambridge Europe Limited
to recover any financial claims arising from the transaction.
Completion of the Habaneras acquisition is not subject to any conditions precedent.
4. PROPERTY SPECIFIC INFORMATION
Details of the property, including property name, geographical location, sector, GLA and weighted average rental
per square metre are set out in the table below:
Weighted Purchase
average rental consideration Estimated
per m2 (excluding transaction
(EUR/m2 /month) transaction related
Property Geographical GLA (11 months to 31 costs) costs
name location Sector (m2) Mar 2019) (EUR) (EUR)
Habaneras Torrevieja, Retail 24 158 17.63 80 626 864 3 120 000
Shopping Alicante, Spain
Centre
The purchase consideration payable for Habaneras is considered to be its fair market value and equates to the fair
market value determined by an independent valuation carried out by James Allwood of Colliers International
Property Consultants Inc as at 23 January 2018. James Allwood is a member of the Royal Institute of Chartered
Surveyors.
5. FINANCIAL INFORMATION
Set out below are the forecast revenue, operational net income, net profit after tax and earnings available for
distribution of the acquisition (the "forecast") for the 11 months ending 31 March 2019 and year ending
31 March 2020 (the "forecast period").
The forecast has been prepared on the assumption that the Habaneras acquisition will be implemented on
9 May 2018 and on the basis that the forecast includes forecast results for the duration of the forecast period.
The forecast, including the assumptions on which it is based and the financial information from which it has been
prepared, is the responsibility of the directors of the company. The forecast has not been reviewed or reported on
by independent reporting accountants.
The forecast presented in the table below has been prepared in accordance with the company's accounting
policies, which are in compliance with International Financial Reporting Standards.
11 months ending Year ending
31 March 2019 31 March 2020
R'000 R'000
Property revenue 72 959 81 354
Straight-line rental income accrual - -
Property expenses (4 708) (5 410)
Net operating profit 68 251 75 944
Finance costs (14 035) (15 231)
Net profit before tax 54 216 60 713
Taxation (1 442) (1 615)
Net profit after tax 52 774 59 098
Profit available for distribution 52 774 59 098
Property Revenue
11 months ending Year ending
31 March 2019 31 March 2020
R'000 R'000
Contracted 69 784 72 221
Near-contracted 3 175 9 133
Uncontracted - -
Total 72 959 81 354
Notes and assumptions
The forecast incorporates the following material assumptions:
1. The forecast is based on information derived from the management accounts, budgets, and rental contracts
provided by the seller.
2. All leases are CPI linked and therefore no straight line income adjustment has been made.
3. Contracted revenue is based on existing lease agreements including stipulated increases, all of which are
valid and enforceable. Leases expiring during the forecast period have been forecast on a lease-by-lease
basis and have been assumed to renew at current market rates unless the lessee has indicated its intention
to terminate the lease. Lease income is classified as near contracted rental income from the date of expiry
of the current lease.
4. Property operating expenditure has been forecast by the property manager on a line-by-line basis based on
management's review of historical expenditure, where available, and discussion with the property manager.
5. Interest costs relating to the debt funding procured of R14.0 million (EUR0.93 million) at an all-in cost of
2.38% have been included in the forecast.
6. No fair value adjustment is recognised.
7. Profit available for distribution is stated net of withholding tax of 2.66%.
8. A EUR:ZAR exchange rate of R15.1420 has been assumed for purposes of the forecast.
9. There will be no unforeseen economic factors that will affect any lessee's ability to meet their commitments
in terms of existing lease agreements.
6. CATEGORISATION OF THE HABANERAS ACQUISITION
The Habaneras acquisition is classified as a category 2 transaction in terms of the JSE Listings Requirements.
Accordingly, the Habaneras acquisition is not subject to approval by shareholders.
10 May 2018
Corporate advisor and JSE sponsor NSX sponsor
Java Capital IJG Securities (Pty) Ltd
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